Solar Hot Water Systems & Costs

More and more Australians are making an effort to reduce their energy bills, but many of us still struggle. We all know we could save power by switching off lights and installing energy-efficient appliances, but have you ever considered just how much energy your hot water system is using? In fact, around 25% of the average household’s energy usage is attributable to water heating, costing households hundreds of dollars every year.

There are plenty of ‘efficient’ hot water systems on the market that promise bill savings, however, none are as cheap to run as solar hot water systems. So, what are solar hot water systems? What do they cost to purchase and run, and how much can you save? Canstar Blue answers these questions and more in this article.

Compare Electricity Plans

Loading...

What is a solar hot water system?

Solar hot water systems utilise energy from the sun to heat water for your home. Solar hot water systems are capable of providing anywhere from 40 to 90 per cent of your home’s hot water needs and are particularly effective in warm climates. However, since you can’t always count on the sun to shine, most solar hot water systems come with electric or gas boosters to ensure your home has enough hot water.

Types of solar hot water systems

There are three main types of solar hot water system – flat-plate collectors, evacuated tube collectors and heat pump systems.

Flat-plate collectors: This system uses a large solar panel–like collector to catch the sun’s rays and transfer the heat to an insulated hot water tank. Flat-plate collectors tend to be the more affordable solar hot water option, however, they are not terribly effective in cooler climates. There are two variants of these systems – roof mounted – where the tank is connected to the collector on the roof, and split – where the panel is installed on the roof while the tank is on the ground.

Evacuated tube collectors: These work similarly to flat-plate collector hot water systems. The difference is that this model collects sunlight using a series of glass tubes that have a vacuum seal. This allows for the efficient transferral of solar energy. As such, evacuated tube collector hot water systems are widely considered to be the most effective, however they are also the most expensive.

Heat Pump systems: Unlike the other solar hot water systems which collect sunlight, heat pump solar systems draw solar heat from the air and use this to heat water. Heat pump solar systems do use some electricity to pump in hot air, but this is a fairly negligible amount.

Advertisement

Solar hot water system purchase costs

A solar hot water system costs between $3,000 and $7,000 fully installed. Prices vary depending on the type of system:

Heat pumps: These are comparatively affordable, costing between $3,000 and $4,000.

In addition, solar hot water systems with gas boosters can cost around $500 to $1,000 more compared with their electric-booster counterparts. Further, split systems are more expensive than roof-mounted hot water storage tanks.

For comparison, non-solar hot water systems generally cost anything from $300 to $2,000.

Electric storage: $500 – $1,000

Gas storage: $700 – $1,800

Electric instantaneous: $500 – $1,400

Gas instantaneous: $300 – $2,000

Solar hot water system running costs

While solar hot water systems are expensive to purchase, they are much cheaper to run than gas or electric storage hot water systems. The exact amount it costs to run a hot water system varies wildly depending on your location, climate and energy tariff. With that said, an average household with a solar hot water system and moderate weather should see at least a 50%-75% reduction in their water heating bill compared to a storage hot water system.

Electric storage vs solar hot water case study:

A typical Australian household with an electric storage hot water system consumes 20kWh of electricity each day. About a quarter of this daily usage (5kWh) is attributable to water heating. The below costs illustrate the expected annual cost of an electric storage hot water system versus a solar hot water system with electric boosters. The calculations also assume a controlled load tariff with a usage rate of 19c/kWh. The ‘sunny’ calculation assumes that solar meets 75% of a household’s hot water needs every day for one year, while the ‘cloudy’ calculation assumes solar only meets 50% of the household’s needs.

Annual hot water electricity usage:

Electric storage

Solar hot water system (Sunny)

Solar hot water system (Cloudy)

$346.75

$86.69

$173.38

*Prices are illustrative only and may not be reflective your home’s electricity usage.

You can see in our example that an average household could save hundreds of dollars every year with solar hot water, and depending on your water usage habits and the climate, you could stand to save even more. Remember than hot water systems are quite hardy and often come with long warranty periods, so there’s plenty of time to make a return on your investment.

Is solar hot water right for me?

If you live in a warm and dry area, then installing solar hot water should be a no-brainer – while solar is more expensive upfront, the energy savings should see you make your money back in no time. However, the decision to install solar hot water is a little trickier for those in some of the colder areas in Australia’s southern states.

Most households in cooler climates should still be able to make their money back over the long-term with a solar hot water system, but if you’re on the fence about it, then you should get a personalised quote to ensure that you’re making the best choice for your budget.

Solar Plans & Prices

Here are some of the cheapest solar-specific deals from the retailers on our database. These costs are based on the Energex network in Brisbane but prices will vary depending on your circumstances. We show one product per retailer, listed in order of lowest price first. Annual price estimates assume general energy usage of 4600kWh/year for a residential customer on a single rate tariff. Price estimates exclude solar feed-in tariff credits. This table may include products from referral partners†. Our database may not cover all deals in your area, and please check retailer websites for up to date information.

Here are some of the cheapest solar-specific deals from the retailers on our database. These costs are based on the Citipower network in Melbourne but prices will vary depending on your circumstances. We show one product per retailer, listed in order of lowest price first. Annual price estimates assume general energy usage of 4000kWh/year for a residential customer on a single rate tariff. Price estimates exclude solar feed-in tariff credits. This table may include products from referral partners†. Our database may not cover all deals in your area, and please check retailer websites for up to date information.

Here are some of the cheapest solar-specific deals from the retailers on our database. These costs are based on the Ausgrid network in Sydney but prices will vary depending on your circumstances. We show one product per retailer, listed in order of lowest price first. Annual price estimates assume general energy usage of 3900kWh/year for a residential customer on a single rate tariff. Price estimates exclude solar feed-in tariff credits. This table may include products from referral partners†. Our database may not cover all deals in your area, and please check retailer websites for up to date information.

Here are some of the cheapest solar-specific deals from the retailers on our database. These costs are based on SA Power network in Adelaide but prices will vary depending on your circumstances. We show one product per retailer, listed in order of lowest price first. Annual price estimates assume general energy usage of 4000kWh/year for a residential customer on a single rate tariff. Price estimates exclude solar feed-in tariff credits. This table may include products from referral partners†. Our database may not cover all deals in your area, and please check retailer websites for up to date information.

Share this article

Related Articles

*QLD, SA and NSW: Price is GST inclusive and is: The estimated lowest possible price a representative customer would be charged in a year for this plan, assuming all conditions of discounts offered (if any) have been met, based on the AER’s model annual usage in the distribution region as stated at the top of each table.

~VIC: Price is GST inclusive and is: The estimated lowest possible price a customer would be charged in a year for this plan, using the Victorian Government’s annual reference consumption for domestic customers in your distribution region as stated at the top of each table and assuming all conditions of discounts offered (if any) have been met.

Some plans may require you to meet certain conditions before a discount may become available to you. Check the energy provider’s plan information for details of all possible discounts that may apply and any conditions that need to be met to be eligible for these discounts. Some plans may have a minimum term longer than one year. In that case the total cost over the term will be much higher than the Price (which is only for one year). Consider the provider’s detailed product and pricing information before making a decision to take out a new plan or switch electricity providers.

^What is the Reference Price?

Reference Price: The reference price is set by the Australian Energy Regulator (AER) for a financial year in relation to electricity supply to residential customers in the distribution region and is based on an assumed annual usage amount. Any difference between the reference price and the unconditional price of a plan is expressed as a percentage more or less than the reference price. The terms of any conditional discounts are shown, along with any further difference between the reference price and the discount applied if a condition is met, expressed as a percentage more or less than the reference price.

>What is the VDO?

VDO: The Victorian Default Offer (VDO) includes a daily supply charge and usage charges (per kilowatt hour). Differences in tariffs across distribution regions reflect the unique costs of providing electricity services in each area. The difference between the VDO and the unconditional price of a plan, based on the Victorian Government’s annual reference consumption for domestic customers in the distribution region, is expressed as a percentage more or less than the VDO. The terms of any conditional discounts are shown, along with any further difference between the VDO and the discount applied if a condition is met, expressed as a percentage more or less than the VDO.

ACT: Costs based on annual household usage of 5499kWh/year on the EvoEnergy network in Canberra, April 2020. For more information on annual cost calculations please click here.

TAS: Costs based on annual household usage of 6775kWh/year on the TasNetworks electricity network in Tasmania, April 2020. For more information on annual cost calculations please click here.

†By clicking on a brand, 'go to site' or ‘details’ button, you will leave Canstar Blue and be taken to our referral partner to compare. Canstar Blue may be paid for this referral. You agree that Canstar Blue’s terms and conditions apply to this referral.

Canstar Blue may earn a fee for referrals from its website tables, and from sponsorship of certain products. Fees payable by product providers for referrals and sponsorship may vary between providers, website position, and revenue model. Sponsorship fees may be higher than referral fees. Sponsored products are clearly disclosed as such on website pages. They may appear in a number of areas of the website such as in comparison tables, on hub pages and in articles. Sponsored products may be displayed in a fixed position in a table, regardless of the product's rating, price or other attributes. The table position of a Sponsored product does not indicate any ranking or rating by Canstar. The table position of a Sponsored product does not change when a consumer changes the sort order of the table. For more information please see How Are We Funded.

To our knowledge, all information in articles on the Canstar Blue website was correct at the time of publication. This information may have changed over time. Refer to the product fact sheet (or relevant similar documentation) before making any purchase decision. Canstar Blue's website terms and conditions apply.